Senate panel OKs freezing electric rates for 3 years

Adriana Colindres

Thursday

May 31, 2007 at 12:01 AMMay 31, 2007 at 7:58 AM

SPRINGFIELD -- Members of an Illinois Senate committee expressed deep reservations Wednesday about the wisdom of approving legislation to roll back and freeze electric rates for at least three years — and then most of them voted for it anyway.

By ADRIANA COLINDRES

STATE CAPITOL BUREAU

SPRINGFIELD -- Members of an Illinois Senate committee expressed deep reservations Wednesday about the wisdom of approving legislation to roll back and freeze electric rates for at least three years — and then most of them voted for it anyway.

House Bill 1750 cleared the Senate Executive Committee on a 7-3 roll call, with three additional senators voting “present.” The legislation, which the House already passed, now heads to the Senate floor. If approved there, it would go to Gov. Rod Blagojevich, who has repeatedly said he would sign such a bill into law.

The measure would affect customers of Commonwealth Edison and the Ameren Illinois utility companies. It would roll back electric rates to their 2006 levels, keep them there for at least three years and refund to consumers the extra money they’ve been paying for electricity this year because of the higher rates.

The cost of electricity soared this year because of the expiration of a long-standing rate freeze that had been part of the state’s 1997 deregulation law.

The bill’s Senate sponsor, Sen. Ira Silverstein, D-Chicago, acknowledged that the utility companies have pledged to fight a reinstitution of the rate freeze in court. He said he doesn’t know if a freeze ultimately would be declared unconstitutional.

But he added: “I can sleep at night, knowing that I’m trying to do what I can” to protect consumers.

Sen. Debbie Halvorson, a Crete Democrat who serves on the committee, said she wasn’t sure she’d be able to sleep if she voted for a rate-freeze bill that got tied up in court, preventing consumers from seeing any benefits.

She voted against it.

Sen. Rickey Hendon, D-Chicago, said he thinks a rate freeze would stunt competition in the electricity market in Illinois. A competitive environment is more likely to lead to lower electric rates, said Hendon, who nonetheless voted for the bill.

Officials from ComEd and Ameren told the committee that again freezing rates would put their companies in financial peril, setting them on the path to bankruptcy.

Scott Cisel, president and chief executive officer of Ameren Illinois, said the consequences would include employee layoffs and reduced investments in the infrastructure system.

After the Senate committee vote, Ameren spokesman Neal Johnson said the company was disappointed with the action but still hopes to avert a rate freeze.

Ameren and ComEd have offered a combined $500 million rate-relief package targeted at the people who have been hardest hit by rising power costs. Ameren’s portion is $200 million, and ComEd’s is $300 million.

The Senate committee vote took place roughly eight hours after a House panel advanced a separate, sweeping plan to temporarily roll back electric rates for customers of ComEd, AmerenCIPS, AmerenIP and AmerenCILCO. No legislation can become law unless both the House and Senate approve it.

The House Electric Utility Oversight Committee voted 5-4 for the revised version of Senate Bill 1592.

Frank Clark, chairman and CEO of ComEd, criticized the 221-page legislation, which he said he got just an hour before the committee considered it.

“What you have in this bill ... will ruin the electric industry in this state for a long time to come,” Clark said. “This is going to Las Vegas and throwing dice with the Illinois electric utility system.”

The measure would create a new entity — the Illinois Power Authority — to purchase electricity. Another provision in the legislation would abolish the terms of the current members of the Illinois Commerce Commission.

The bill’s sponsor, Rep. George Scully, D-Flossmoor, said he was dissatisfied with the ICC in part because it approved a “reverse auction” process that was used last year to set future electricity rates.

The reconstituted ICC would consist of three members who are attorneys, certified public accountants or professional engineers. The other two members would have experience in economics, finance, energy policy or environmental studies.

The governor would retain his authority to appoint ICC members, and the appointments would be subject to confirmation by the Senate and the House. At present, the House does not confirm the appointments.

The legislation also would impose a tax on power generators and require parent companies that produce or market power to divest themselves of any utility subsidiaries. That means, for instance, Exelon Corp. would have to divest itself of ComEd, and Ameren Corp. would have to divest itself of AmerenCIPS, AmerenIP and AmerenCILCO.

Officials from Gov. Rod Blagojevich’s office, including chief operating officer John Filan, attended the House committee hearing and signed in as supporters of the legislation, but they did not testify.

Adriana Colindres can be reached at (217) 782-6292 or adriana.colindres@sj-r.com.

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